Foreign exchange rates

What the syllabus asks of you

• definition of foreign exchange rate Floating and fixed systems.
• determination of foreign exchange rate in The demand for and supply of a currency in the foreign exchange market and the determination of foreign exchange market the equilibrium foreign exchange rate.
• causes of foreign exchange rate fluctuations Including changes in demand for exports and imports, changes in the rate of interest, speculation, and the entry or departure of MNCs.
• consequences of foreign exchange rate The effects of foreign exchange rate fluctuations on export and import prices and spending on imports fluctuations and exports via the PED.
• floating and fixed foreign exchange rates The difference between, and the advantages and disadvantages of, a floating foreign exchange rate and a fixed foreign exchange rate system.